Disruptive innovations are simpler,cheaper, more, accessible products or services, often created by “two guys in a garage.”
These inferior products and services seemingly decimate an industry leader who keeps on making very profitable, perfectly good products better and better, outstripping the needs and pocketbooks of already well-served consumers.
The empirical evidence shows that new consumers are very willing to “hire” a cheaper product or service to carry out a specific task if and only if that product is good enough to get the job done.
Disruptive goods and services are at first marketed to the non-consumer or a non-existent market altogether with little, if any, profit—at first. This is known as the innovators dilemma.
The best-managed companies’ efforts to innovate are almost always ineffectual and most vulnerable to extinction: one only be reminded that there are no integrated steel mills, steam ships or buggy whip manufacturers left in America.
Remember Eastmen Kodak? Blockbuster Video? Borders? Encyclopedia Britannica? U.S Steel? Digital Equipment Corp? Tower Records? All these companies and products were decimated by disruptive innovations.